How super is taxed
Do you pay tax on super contributions?
Your superannuation is subject to tax at three different points:
- When you contribute;
- When your investment earns money; and
- When you withdraw your funds
How you contribute to your superannuation fund will determine if these contributions will be taxed or not (see concessional contribution and non-concessional contributions below).
Investment earnings within your superannuation fund are generally taxed up to 15%. The tax you pay on withdrawals from your superannuation fund depends on how you withdraw it, the type of contribution made to your super fund and how old you are. You can find more information about withdrawals in the Product Disclosure Statement.
There are two types of superannuation contributions:
Concessional contributions
Concessional contributions help you save for retirement by growing your super at a lower tax rate.
Benefits
- Tax savings: concessional contributions are taxed at 15%, usually lower than your income tax rate.
- Lower taxable income: Salary sacrifice or personal deductible contributions reduce your income tax.
- Grow your retirement savings: Boost your super in a tax-friendly way.
- Make catch-up contributions: Unused caps can be carried forward if your balance is under $500k.
More information about concessional contributions
The tax you pay on contributions depends on how and when you contribute to your super. Concessional contributions (contributions made from your before-tax income, the superannuation guarantee contributions your employer makes, salary sacrifice, any other employer contributions and contributions claimed as a tax deduction) are generally taxed at 15%.
A concessional contributions cap (limit) applies to these sorts of contributions. If you exceed the cap in any financial year, the excess concessionalcontributions are taxed at your marginal tax rate.
The concessional contributions cap for the 2025/26 financial year is $30,000 for all individuals regardless of age.
Are concessional contributions tax-deductible?
You cannot claim a tax deduction on your before-tax (concessional) contributions because you’ve already received the concessional rate of 15%.
If you make personal contributions to your super fund from your after-tax income and then lodge a valid notice of intent to claim a deduction, those contributions become concessional. You can then claim a tax deduction for them in your tax return, and they will be taxed at 15% in your super fund, rather than your marginal income tax rate.
Carry-forward rule
The carry-forward rule for concessional super contributions in Australia allows you to use the accumulated untouched part of the cap from the past five financial years, helping you boost your super and reduce tax.
The current concessional contributions cap is $30,000 (as of 2025–26).Unused Cap? If you didn’t use the full cap in any of the last five years, the leftover amount can be carried forward. Remember, your total super balance must be below $500,000 at the end of the previous financial year (i.e. 30 June).
Non-Concessional contributions
Non-concessional contributions (contributions made from your post-tax income) do not generally attract tax, as you have already paid tax on your income. However, a non-concessional contributions cap applies.
The non-concessional contributions cap for the 2025/26 financial year is:
- $120,000 a year; or
- $360,000 in a rolling three-year period under the bring forward provision if you are under age 75.
If you exceed the above limits, you have the choice to release the excess contributions (plus any interest) or to leave them in the Fund and you may be subject to a penalty tax of up to the highest marginal tax rate.
If your total income is less than $62,488 in the 2025/24 financial year and you make a non-concessional contribution before 30 June 2026, you may be entitled to a super co-contribution payment.
You may wish to speak to a First Super financial adviser to discuss ways to maximise superannuation contribution caps, or your plans to access your superannuation and any tax implications.
Are non-concessional contributions tax-deductible?
You may be able to claim tax deductions for super contributions classified as ‘non-concessional’ if you meet certain eligibility requirements. Note that this will count under your concessional contributions cap.
What’s the benefit of non-concessional super contributions?
Non-concessional contributions can help your super grow faster and provide you with more at retirement. When you make after-tax contributions, only the investment earnings will be subject to tax, typically at a lower rate of 15% (compared to investment earnings outside of super, which can be taxed up to 45% depending on your tax bracket.)
Why am I paying contribution tax on my super?
If you exceed contribution limits for both concessional and non-concessional contributions, extra taxes may apply. Contact your financial adviser about next steps on how to avoid contribution tax.
We’re here to help, so give us a call.
To discuss your super contributions for this financial year, or for more details how to make concessional contributions and non-concessional contributions without incurring contributions caps, speak to our Member Services Team on 1300 360 988, or email us.